This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only.

The proposed project is a comprehensive investment and advisory services program for Sogebank (or the Bank), the largest banking group in the Republic of Haiti with total assets of approximately $750 million. In a country were only 1% of the population has access to formal credit, the support of IFC in one of the soundest financial institutions will help improve access to finance by the population by promoting the creation of new products, increasing the lending capacity of the institution and promoting greater competitiveness and efficiency in the local market. IFC’s investment would include equity in the Bank as well as guarantees for trade confirmation lines.

Sogebank is the leading bank in Haiti, with market shares of 28% and 34% in loans and deposits respectively. The Bank is a commercial bank with activities spanning retail and corporate banking, SME and microfinance, remittance distribution, and factoring which are operated as independent businesses through separate subsidiaries. Sogebank was founded in 1986 by a group a Haitian businessmen who took over the operations of the former Royal Bank of Canada, which was present in Haiti since 1917.

Project sponsor and major shareholders of project company

The shareholding of Sogebank is fairly fragmented among several Haitian prominent families, with no single individual shareholder permitted to hold more than 15%. The three largest individual shareholders owning more than 5% of the capital are Jean-Claude Nadal (9.2%), Pascale & Ralph Delain (6.4%), and Roger Jaar (5.2%).

Total project cost and amount and nature of IFC's investment

IFC’s equity investment in Sogebank consists in the acquisition of a minority stake in the Bank (up to 10%) for up to $7 million. The trade finance guarantee facility in an amount of up to $10 million would be under IFC’s Global Trade Finance Program (GTFP).

IFC investment as approved by Board

4 million (USD)

Product Line

IFC Investment (million USD)

Risk Management

Guarantee

Loan

Equity

4

* These investment figures are indicative

Location of project and description of site

Sogebank is headquartered in Port-au-Prince, the capital city of the Republic of Haiti. It has the largest private branch network in the country with 40 branches, and a solid image and reputation throughout Haiti.

Anticipated development impact of the project

This project is expected to have a high developmental impact by strengthening the Haitian banking sector through the presence of institutional ownership in the largest bank, which will foster stronger governance, improved operational efficiency, and boost product innovation and service quality thereby fostering competition in the sector, which in turn will result in increased and improved access to finance, especially to currently underserved market segments of micro, small and medium enterprises (MSMEs).

The combination of IFC’s advisory services in the area of MSME financing, coupled with Sogebank’s scale and outreach in Haiti will be key in reinforcing the impact of the project. Finally, given that Haiti is an impoverished country with an undiversified economy that is dependent on imports for food, energy and manufactures and has few exports (apparel industry, agriculture), a GTFP line is expected to be highly developmental, both for Sogebank, and for the Haitian economy as it will facilitate imports of goods and equipment to support the economy, while at the same time scaling up an important line of business for the Bank. As such, this initiative is in line with IFC’s strategy to focus on IDA countries.

IFC's expected development contribution

IFC’s role in the project stems from its unique ability to support Sogebank through a combination of long-and short-term investments as well as advisory services, and act as a catalyst to accelerate the Bank’s institutionalization, support its expansion strategy within Haiti, and increase the Bank’s international visibility. IFC’s presence will add significant value by helping the Bank implement international best practices of corporate governance, risk management, as well as improved systems and policies, having a demonstration effect over the banking system and the private sector at large, and thereby sending a strong signal about IFC’s commitment and support to Haiti’s financial sector.

Environmental and social issues - Category FI

This project has been classified as a Category FI project according to IFC’s Environmental and Social Review Procedure. During appraisal, IFC will analyze the FI portfolio and the activities proposed to be supported with IFC financing for types of transactions, size, tenor and industry sectors and determine the Applicable Performance Requirements, if any, that would include a combination of:

- The IFC FI Exclusion List,
- The applicable National Social and Environmental Laws and regulations and/or
- The IFC Performance Standards

IFC will also review, if required, the capacity of the FI to manage social and environmental risks and to establish and maintain a Social & Environmental Management System (SEMS). If required, IFC will suggest Supplemental Actions to address any gaps in the SEMS. Based on the review, the project will be required to:

- Develop an, or upgrade, if necessary, any existing Social & Environmental Management System (SEMS), prior to disbursement to the satisfaction of IFC
- Identify responsible, qualified persons to manage and implement the SEMS
- Commit to implement the SEMS, to ensure that its investments/activities supported by IFC financing are in compliance with the - Applicable Performance Requirements
- Submit a periodic report to IFC as per a format to be provided by IFC